from the United States District Court for the Middle District
of Tennessee at Nashville. No. 3:16-cv-02498-Aleta Arthur
Trauger, District Judge.
Charles D. Swift, Christina A. Jump, CONSTITUTIONAL LAW
CENTER FOR MUSLIMS IN AMERICA, Richardson, Texas, for
Ellen Knack, OFFICE OF THE TENNESSEE ATTORNEY GENERAL,
Nashville, Tennessee, for Appellees.
Before: MERRITT, MOORE, and ROGERS, Circuit Judges.
NELSON MOORE, CIRCUIT JUDGE.
case arises from a property tax assessed against an
otherwise-tax-exempt religious nonprofit, the Islamic Center
of Nashville (ICN), for a period of time during which it had
formally transferred title to a bank through a financing
vehicle called an ijara agreement that complies with
Islamic doctrine. After ICN regained title to the property,
it asked the Tennessee State Board of Equalization to apply
its tax exemption retroactively to cover the period of time
during which the bank had held title to the property, but
both an Administrative Law Judge and then the State
Board's Assessment Appeals Commission denied ICN's
requests. The Tennessee statute governing tax appeals names
the appropriate state chancery court as the next step for
obtaining judicial review after these administrative
adjudicators have first addressed the case. Because ICN
instead filed suit in federal court, leveling a range of
constitutional, federal statutory, and state statutory claims
that would (on its theory) vitiate its obligation to pay
taxes of the kind assessed, and because Tennessee's
statutory provision for state-court appeal provides a plain,
speedy, and efficient alternative to federal-court review,
the Tax Injunction Act bars ICN's suit in federal court.
Therefore, we AFFIRM the judgment of the
district court dismissing ICN's case for lack of
plaintiff-appellant in this case, ICN, is a duly credited
religious nonprofit that operates both a mosque and a school
in Nashville, Tennessee. R. 1 (Compl. ¶ 4.1-4.3) (Page
ID #2); R. 1-5 (Compl. Ex. E, Letter to Charlie Cardwell)
(Page ID #47-48). In August 2008, it commenced construction
on a new school building, which it financed by entering into
an ijara agreement with a bank, whereby it could
"borrow money without running afoul of the Islamic
prohibition on the payment of interest." R. 1 (Compl.
¶ 4.5-4.7) (Page ID #3). Under the terms of the
agreement, the bank essentially bought the property from ICN,
leased it back to ICN, and then ultimately sold it back to
ICN, with the lease payments serving the function that would
otherwise have been served by interest payments. See
R. 1 (Compl. ¶ 4.6-4.8) (Page ID #3); R. 1-3 (Compl. Ex.
C, ALJ Initial Decision & Order) (Page ID #36-37). The
ijara agreement lasted from August 2008 to October
2013, during which time the property was "continuously
occupied by [ICN] and physically used solely for exempt
religious educational purposes." R. 1-3 (Compl. Ex. C,
ALJ Initial Decision & Order) (Page ID #38). The bank,
however, held legal title to the property throughout this
period of time. R. 1 (Compl. ¶ 4.8) (Page ID #3).
the ijara agreement did not change the use or
possession of the property, it did change the ownership, and
the 2008 transfer of title from ICN to the bank thus prompted
the county's tax assessor to "return the property
to the tax roll." R. 1-4 (Compl. Ex. D, Appeals
Comm'n Final Decision & Order) (Page ID #43). When
ICN completed its payments in October 2013, it "regained
the unencumbered title to the property." R. 1 (Compl.
¶ 4.11) (Page ID #4); R. 1-2 (Compl. Ex. B, Quit Claim
Deed) (Page ID #28-30). In February 2014, "ICN applied
for a property tax exemption regarding [the property], . . .
seeking retroactive application." R. 1 (Compl. ¶
4.12) (Page ID #4). The Tennessee State Board of
Equalization's designee regranted ICN its exemption, but
not for the time during which the bank had held title to the
property. R. 1-3 (Compl. Ex. C, ALJ Initial Decision &
Order) (Page ID #32). ICN appealed, and an administrative law
judge (ALJ) for the State Board of Equalization heard its
appeal in January 2015. Id.; R. 1 (Compl. ¶
4.14-4.15) (Page ID #4). In February 2015, though noting that
he was not "insensitive to the taxpayer's
predicament" and calling the "outcome particularly
unfortunate, " the ALJ upheld the tax assessment for the
period during which the bank held title. R. 1-3 (Compl. Ex.
C, ALJ Initial Decision & Order) (Page ID #36, 38-39).
appealed from the ALJ's decision, this time to the State
Board's Assessment Appeals Commission. R. 1 (Compl.
¶ 4.21) (Page ID #5). In May 2016, the Commission ruled
that although it "sympathize[d] with the taxpayer's
sincere desire to comply with religious principles, [it was]
unable to ignore the legal transfer of title." R. 1-4
(Compl. Ex. D, Appeals Comm'n Final Decision & Order)
(Page ID #44). It noted that its order was "subject to,
" among other forms of (discretionary) administrative
review, judicial "[r]eview by the Chancery Court of
Davidson County [the county in which Nashville is located] or
other venue as provided by law." Id.
not seek review in the Tennessee chancery court, and, as it
acknowledged in its Complaint in this case, "[t]he
decision of the Assessment Appeals Commission became final
June 16, 2016." R. 1 (Compl. ¶ 4.25) (Page ID #6).
Instead, ICN filed suit in federal court in September 2016
against the State of Tennessee, the Tennessee State Board of
Equalization, and Charlie Cardwell,  the Metropolitan Trustee of
Davidson County. In its suit, ICN alleged causes of action
under the federal Religious Freedom Restoration Act (RFRA)
"and its Tennessee Counterpart"; the federal
Religious Land Use and Institutionalized Persons Act
(RLUIPA); the federal Elementary and Secondary Education Act
of 1965; and the First Amendment's Establishment
Clause. R. 1 (Compl. ¶¶ 5.1-5.21) (Page
ID #7-12). ICN sought damages, as well as "preliminary
and permanent injunctive and declaratory relief." R. 1
(Compl. ¶¶ 6.1-6.6) (Page ID #13).
October 2016, the state parties (the State) moved to dismiss
for lack of subject-matter jurisdiction under Federal Rule of
Civil Procedure 12(b)(1), citing (among other arguments) the
federal Tax Injunction Act, 28 U.S.C. §
1341. R. 13 (Mem. in Support of Mot. to Dismiss)
(Page ID #74). In December 2016, the district court granted
the State's Rule 12(b)(1) motion on that ground. R. 27
(Dist. Ct. Mem.) (Page ID #146). ICN timely appealed.
appeal raises two issues: First, whether the district court
was correct to dismiss ICN's claim for lack of
subject-matter jurisdiction on the ground that it was barred
by the Tax Injunction Act (TIA). And second, whether the
district court abused its discretion by dismissing ICN's
case without giving ICN leave to amend. For the reasons that
follow, the district court was correct to dismiss the case as
barred by the TIA and there was no abuse of discretion.
Standard of Review
Court reviews de novo the dismissal of a complaint
under Fed.R.Civ.P. 12(b)(1) for lack of subject matter
jurisdiction." Colonial Pipeline Co. v. ...